Govt’s Tax Incentives for Telecom Industry and Users to Come into Effect from July

The government has announced massive tax incentives packages for the telecom sector.


However, while addressing a press conference here on Thursday, the Federal Minister for Information Technology and Telecommunication, Syed Aminul Haque, said that all the incentives will be implemented from 1 July 2021.

He said that the federal Cabinet has unanimously approved the industrialization of the telecom sector and the gradual reduction of various heavy taxes imposed on it and mobile phone users. He remarked that this is a major achievement that will directly benefit mobile phone users and will help to spread the spirit of a Digital Pakistan (connectivity) to the remote areas of the country.

He explained that under the decision of the Cabinet and on the proposal of the Ministry of Information Technology and Telecommunication (MoIT&T), the telecom sector will be given the status of an ‘Industry’ from the next financial year 2021-22, and advance income tax on mobile phone users will be reduced from 12.5 percent to 10 percent and further to eight percent in the financial year 2022-23.

Similarly, the federal excise duty on telecommunication services has been reduced from 17 percent to 16 percent, and the collection of Rs. 250 on the issuance of a new SIM card is being abolished in line with the suggestion of the ministry.

Additionally, the Cabinet has approved the introduction of a simple and easy tax system and the exemption of the telecom sector from all withholding taxes and complex collections.  It has also approved the reduction of the tax on telecommunication services from eight percent to three percent on all the telecommunication companies that are licensed by the Pakistan Telecommunication Authority (PTA).

He added that the federal Cabinet had heeded the recommendations of the ministry and approved a reduction of four percent customs duty and nine percent regulatory duty on the import of telecommunication equipment and on the raw materials of the optical fiber cable manufacturing industry. It has also issued instructions to the Federal Board of Revenue (FBR) to reduce taxes from 20 percent and seven percent to five percent and three percent respectively.

The minister also revealed that several projects that had been initiated by the ministry are also, directly and indirectly, creating more than 100,000 jobs.

He remarked that for the first time in the history of Pakistan after the preparation of the Right of Way Policy, the credit for the revolutionary initiative of getting its approval from all forums also goes to the MoIT&T.

The policy sets out a fee structure for working in the required areas. Similarly, telecom facilities will be considered as “critical infrastructure”, and no obstruction or unnecessary problems will be allowed for this purpose. Other important issues, including the “Common Services Corridor”, the security of telecom infrastructure, and safety measures on health principles have been included in the Right of Way policy which will be binding on all the concerned agencies and administrations and is a kind of one-window operation.

Minister Haque said that the Universal Service Fund of the MoIT&T had played a major role in this outstanding performance under which 32 different projects worth about Rs. 22 billion have been launched during the 31 months of the incumbent government. Additionally, broadband services are being provided to about 4 million people in 10,132 villages of 50 districts of the underdeveloped areas.

According to the minister, the Pakistan Software Export Board under the MoIT&T had received 40 percent additional export remittances in the first six months of the current financial year until 31 December 2020 and by the end of this financial year, and it will also cross a billion targets.

Furthermore, dozens of projects titled ‘Tech Destination Pakistan’ have been launched under the Pakistan Software Export Board to promote the IT industry with the aims to provide facilities and training opportunities to IT professionals and IT companies, and to attract local and foreign investors.

The minister revealed that on the other hand, work has been started expeditiously for the laying a network of software technology parks across the country under which 40 software technology parks have been set up in Swat, Bannu, Quetta, Faisalabad, Karachi, and Sukkur under a public-private partnership. Such parks in Gilgit and Hyderabad have made millions of dollars in business within a few months of their establishment.

Similarly, PC One had been submitted to provide ‘Rental Subsidy’ to 25 software technology parks in small areas. Moreover, the foundation stone for the establishment of IT Parks in Karachi and Islamabad at a total cost of Rs. 44 billion will be laid soon.

He also stated that the National IT Board (NITB), which is a subsidiary of the MoIT&T, had provided all the technical facilities and support for the structure of the National Command and Operations Center (NCOC) during the outbreak of COVID-19 without the NITB (NCOC).

It would have been almost impossible to establish this in the short term. However, NITB Digital Pakistan has developed 35 useful mobile applications and web portals to provide public services at the fingertips of citizens under Vision, including Pak Naghaban, the Code Information Platform, the Resource Management System for the NDM, and the Real-Time Dashboard.

The minister said that incubation centers have been set up in five major cities of the country under Ignite, and 691 start-ups have registered themselves. Similarly, the plans to set up incubation centers in Faisalabad, Hyderabad, Kamra, Mardan, and other cities are in the final stages.

In the field of tea exports, 200 million is annually brought into the national revenue, and more than 1.7 million individuals have enrolled through the online training platform ‘Digi Skills’ so far.

Minister Haque said that the performance of the SCO under the MoIT&T in Gilgit-Baltistan (GB) and Azad Jammu and Kashmir (AJK) has also been exemplary under the incumbent government.

The SCO had received revenue from GB and AJK for its services in 2018-19 and an increase of 40 percent over the previous year (revenue of Rs. 5.50 billion) was achieved while the GSM network in GB was expanded to 75 percent over the last two years under the SCO for which 350 mobile towers were installed for the transfer from 2G network to 4G network, and another 200 more towers are being installed this year.

Courtesy: Pro Pakistani

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